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Financial Impact of a Divorce Later in Life

According to the Office for National Statistics, as of 2017, approximately 42% of UK marriages end in divorce. And while half of those marriages will end in the first 10 years, these days more people are filing for divorce later in life. In fact, since the mid-80s, the average age for divorce in both and women has gone up by 8 years.

This article does not constitute advice. Professional advice should be taken prior to acting on any part of it. Your home may be repossessed if you do not keep up repayments on your mortgage or any other debt secured on it.

Reasons behind later in life divorce

It seems a combination of factors are responsible for the increase in divorce amongst the older generation.

Divorce is no longer seen as taboo, so people who would have normally stayed in relationships are breaking out on their own.

And with more people on the market, there are more options for newly single older individuals to find a partner – there are even dating sites specifically for seniors.

Another contributing factor could be that people are living longer and having a more active retirement.

Individuals want to get out of an unhappy marriage so they can enjoy this time they worked so hard for their whole lives.

Financial Impact

Even though divorce can be freeing emotionally, it can be a huge burden financially for at least two-thirds of divorced couples, and more than 25% will end up selling their homes to cover expenses.

Legal fees alone could range from £17,000 and £30,000! On top of that, divorcees will need to deal with dividing up their shared assets and paying off any debts.

Home sweet home?

The other hard task is making a decision on the living situation. Individuals considering staying in their home will need to remember that the profits generated from the sale of their home could help a great deal down the road.

Dealing with important decisions, such as where to live, during this emotional time may be difficult for many people.

Consulting with a financial advisor early on in divorce proceedings will provide guidance and help with making these tough decisions.

Effect on retirement

Divorce may reveal some holes in an individual’s retirement plans. Because people are living longer, their pensions and savings must also stretch for a longer time.

But since interest rates are low and it’s hard to guarantee an income from investments, a divorce could throw a spanner in the works.

Pensions are one of the assets up for discussion during divorce, but dividing this money will dwindle the pension pot much faster.

Lifetime mortgage

If a choice is made to stay in the family home or if more money is needed during retirement, an option to help finance these situations is a lifetime mortgage.

A lifetime mortgage is a loan that is taken out against your home and doesn’t need to be repaid until death or a move into long-term care.

It’s useful because it allows you to access equity you have in your home, tax free, without needing to sell it.

So if the assets won during the divorce deplete quicker than expected during your retirement, a lifetime mortgage could help provide additional income.

Be sure to work with a financial advisor if you are entertaining this alternative because it is not without its complications.

“While more people over 60 are doing away with ‘til death do you part, a divorce later in life has a significant financial impact on those couples, perhaps even more so than younger ones.” Darren Scott-Guinness, Independent Financial Adviser

They have markedly more assets to consider such as the family home and shared wealth that will need to be divided up.

Plus, they’ll have to deal with an expensive divorce during a time when they should be saving money for, or enjoying, retirement. With many options to consider to help get you through this difficult time, it would be wise to partner with a financial advisor to ensure you have a solid financial plan.

If you unfortunately find yourself in this situation, contact us today so we can help you make sound fiscal decisions.

Need financial advice related to a divorce?
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Dental & Medical Financial Services have been helping doctors and dentists to build and protect their wealth, whilst saving tax for over 25 years.
Call Darren to discuss your options.

Tel: 01403 780 770


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